Featured in Office Technology Magazine: Kraft Business Systems Dealership focused on health-care vertical

This article was written by Brent Hoskins, Executive Director of the Business Technology Association. He is the editor of Office Technology magazine. He can be reached at brent@bta.org or (816) 303-4040.

For many smaller office technology dealerships, growth is often achieved by focusing on a particular vertical niche. That was the case with Kraft Business Systems, based in Grand Rapids, Michigan. A focus on health care ultimately helped Kraft grow from a $400,000 dealership when it was acquired by Jeff Cousins in 1994 to almost an $11-million dealership today. However, there is a surprising twist to Cousins’ story.

“I’ve never been able to say, ‘I’m at an age where I can just ride out where I’m at and take advantage of the leverage that’s already been created,’” Cousins says. “So, I’ve been comfortable making changes over the years. I got into healthcare because I needed to find a way to compete with manufacturers and larger dealerships in our market.”

Cousins recalls the day that one of Kraft’s vendors asked if he wanted to enter the health-care space and sell an EMR (electronic medical records) solution. “I said, ‘Sure! What’s an EMR solution?’” he says. “That’s how we got into it. Candidly, it was a major investment on our part from a staffing perspective, training and time.”

Actually, the first go-round for Kraft with an EMR solution partner was “one of the worst decisions we ever made,” Cousins says. “I had no control over the implementation, training, support, follow up or optimization. So, we sat down as a group and I said, ‘If we can’t find a partner that is going to allow us to control the outcome like we can with imaging and IT solutions, I don’t want to do this.’”

That led Kraft to a long and successful relationship with eClinicalWorks. “It took us a year to sign off on certified training, but it was actually a fairly natural fit for us,” Cousins says. “We had more than 750 EMR implementations.”

The eClinicalWorks solution is designed for the “ambulatory space,” Cousins says. “Our focus was on independent physicians, but that opened up other areas to us. We started getting contacted by health systems saying, ‘We are struggling with how to optimize the doctors’ practices that we own.’ So, we were getting in front of some of these hospitals and, all of a sudden, we were doing practice billing and HIPPA compliance work; in our second year, we did about a million dollars just in HIPPA certification and contract work alone. We were also doing accounting and bookkeeping work.”

The focus on health care with the EMR solution also allowed Kraft to expand its reach with imaging devices (the dealership offers Copystar, Lexmark and Sharp products) and managed IT services, which now represents about 30 percent of the dealership’s revenue. Once inside doctors’ practices, “it was a logical play for us to then be able to start talking about how we could also manage both their IT and imaging,” Cousins says. “If you look at our last 35 sales in the health-care space, 85 percent of them have imaging solutions and 60 percent have IT solutions from us.”

Its history in the health-care industry has distinguished Kraft from its competition. “It is obvious to a practice manager, physician group or anybody else in the health-care space that we’ve invested a lot of time and energy to understand the industry,” Cousins says. “We understand their acronyms, their pain points, the frustrations doctors face and why health systems often lose money on the physicians’ groups they acquire. It takes a long time to be able to talk with integrity and have more than one person who can do so; that’s a big investment. We probably invested $1 million during the first three or four years in understanding the industry.”

What is the surprising twist to Cousins’ story? He sold the dealership’s health-care group three years ago. “We started talking to the largest health-care systems in the state of Michigan,” he says. “They were very intrigued with what we could do, but the problem was scalability. It was: ‘Great idea, but how do you scale up to a $6- to $10-billion health system?’”

Cousins says it was a valid question. “The expectations would be at a whole new level,” he says. “Actually, we went through this when we got an order for 3,000 imaging devices from one company and made all the mistakes. We realized we were in a different space, and that those kinds of mistakes were never going to be acceptable and could kill us. So, we sold our health-care group to the largest malpractice insurer in the country and I went to work for them for a year.”

Yes, Cousins went to work for the company that acquired Kraft’s health-care group, serving as an executive vice president while a core group of management continued to oversee Kraft. During his one-year tenure at the company, he worked to generate new business in the state of Ohio. “I generated $3.5 million for the entity in a year,” he says. “That was helpful for Kraft long-term, but really exhilarating for me, a sales guy who enjoys that kind of challenge.”

Helpful for Kraft? There were no non-competes in place with the malpractice provider that precluded Kraft from selling its other products and services to the prospects Cousins was pursuing. “When I was in Ohio, we were able to sell 700 to 800 imaging units in the state,” he says. “We did the same thing in Indiana.”

Today, after that one year at the malpractice insurer, two years back at the helm at Kraft and the expiration of non-competes in the health-care space, Cousins is re-entering the vertical, poised for growth and armed with the insight and experiences of the past.

“After about a three-year hiatus, we’re moving forward again with a very large partner in the health-care space,” he says, noting that Kraft has not only grown organically in the past three years but recently made its first acquisition in the state of Michigan. “There are many opportunities for dealers; for us, healthcare has proven to be our leading opportunity. You just have to be willing to explore, find the opportunity that is best for your dealership and recognize that there will be a few unknowns as you move forward.”

This article was written by Brent Hoskins, Executive Director of the Business Technology Association. He is the editor of Office Technology magazine. He can be reached at brent@bta.org or (816) 303-4040.